RAS question
The '4R strategy' for NPA resolution includes:
Correct answer: (C) Recognition, Resolution, Recapitalisation, Reforms.
The 4R strategy for NPA resolution consists of recognition, resolution, recapitalisation and reforms.
Explanation
The official 4R formulation is recognition, resolution, recapitalisation and reforms. PIB describes it as a comprehensive government strategy for public sector banks: transparent recognition of NPAs, resolution and recovery of value from stressed accounts, recapitalising PSBs, and reforms in PSBs and the wider financial ecosystem. AQR 2015 improved recognition of stressed assets as NPAs; resolution used mechanisms such as IBC and NARCL; recapitalisation strengthened PSBs; and reforms covered governance, mergers and the PCA framework. Therefore, option C is not just a list of banking terms; it captures the official policy architecture used to address stressed assets in public sector banks.
Why the other options are wrong
- (A) Regulation and refinancing are plausible banking terms, but PIB states the official 4R strategy as recognition, resolution, recapitalisation and reforms.
- (B) Review, rebuild, recoup and restart do not correspond to the government's stated NPA strategy for PSBs and miss the official pillars of recognition, resolution, recapitalisation and reforms.
- (D) Reduction, rescheduling, reclassification and reporting sound procedural, but they are not the 4R framework identified by PIB for reducing NPAs of PSBs.
Concept
This tests banking-sector stress resolution under Indian Economy, especially how policy handled NPAs after the AQR. It recurs in RAS because NPAs link macroeconomic stability, public sector banks, insolvency reform and financial-sector governance.